Wealth Management

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Cayman Islands: What Are The Go-To Jurisdictions For Wealthy Middle Easterners And Why?

Ultra High Net Worth Middle Eastern families and individuals have a variety of jurisdictions to look to for succession planning and asset protection vehicles, but the three "go-to" jurisdictions are Cayman, Guernsey and Jersey. Historically, Ultra High Net Worth Middle Eastern families and individuals ("UHNW MEs") may have looked to the Cayman Islands and the British Virgin Islands when selecting a jurisdiction to base an offshore corporate structure. UHNW MEs now look to Cayman as a jurisdiction to house their succession planning vehicles. Guernsey and Jersey are both Crown Dependencies, which means they are not part of the UK but are self-governing dependencies of the Crown. Cayman is a British Overseas Territory, which means it has a constitutional link with, but does not form part of the UK and is similarly self-governing. This status of these three jurisdictions has provided them with the economic, legal and political stability to attract UHNW MEs and continually develop their respective financial services industries.

Arabesque: An Islamic Fund That Bucks the Trend

Arabesque is a UK based fund manager. Their basic premise is that they combine cutting-edge artificial intelligence and algorithms with a powerful ethical screening tool. Arabesque consists of academics coming from a diverse array of fields including physics, computer science, artificial intelligence, and engineering. Through machine learning, big data and over 2501 environmental, social and governance metrics (ESG), its help investors to make more sustainable decisions. It also live-captures news signals from over 30,000 sources from over 170 countries and quantifies this information to form part of the analytics. Arabesque Q3.17 Systematic is a global Shariah compliant fund launched in 2015, adhering to Shariah investment guidelines and utilising the Systematic strategy. The smart algorithms adhere to a strict rules-based, quantitative approach and incorporate the Islamic shariah guidelines from AAOIFI.

Mideast family businesses should focus on succession planning, wealth transfer

The desire for wealth transition means that many family businesses may have to change their approach and look outside the family to increase that longevity rather than simply relying on the next generation inheriting the family business. It may be that the skill set or appetite of the next generation to take on the family business is simply not there. Furthermore, the inheritance laws governing the transfer of assets locally may vary from those applicable to assets located abroad. Wealth planning company Julius Baer expects to see an increase in the number of Dubai International Financial Centre (DIFC)/Abu Dhabi Global Market (ADGM) Foundations to support wealth and succession planning for clients in the UAE.

#UAE’s personal wealth shoots past $400 billion mark

According to Boston Consulting Group (BCG), personal wealth held by UAE residents surged to $400 billion between 2014 and 2019, with 48.5% of it held by millionaires in 2019. The consultancy reckons the ranks of UAE’s millionaires are expected to grow by 4.2% annually over the coming four years. The UAE represented 7.1% of the share of personal wealth pool in 2019 in the Middle East and Africa, having grown by 3.8% annually to $400 billion between 2014-19. The consultancy says the wealth management industry's value proposition will change over the next two decades, new forms of interaction will evolve, as well as new business models.

Global high net worth (HNW) wealth will decline by $3.1 trillion in 2020: report

According to a new report released by Oliver Wyman and Morgan Stanley, Covid-19 will fundamentally change the way the Wealth Management industry in the Middle East operates. The report, called Wealth Management: After the Storm, highlights how a golden decade of growth for the Wealth Management industry has been drastically disrupted by Covid-19. Raji Souag, Partner at Oliver Wyman Middle East, sees global high net worth wealth declining by four percent, or $3.1 trillion in 2020. He believes that digitalisation and globalization will be among the immediate priorities of Wealth Management firms. Advisors will remain central to client relationships, however, they need to be supported with strong digital capabilities.

#UAE and #Saudi women control assets worth $326bln - BCG

Women’s wealth in the Middle East is expected to grow to $1.1 trillion from the current $786 billion during the 2019-2023 period. As of 2019, more than 40% of women’s wealth in the Middle East is concentrated in the UAE and Saudi Arabia where women control assets worth $102 billion and $224 billion. According to Boston Consulting Group (BCG), women’s wealth is projected to grow at a compound annual growth rate (CAGR) of 8.3% to $140 billion in the UAE and of 5.1% to $273 billion in Saudi Arabia by 2023. Women are likely to set the region’s wealth management trend, if asset managers target this market segment as a business opportunity and personalise their approach. Women are more likely than men to invest on the basis of their values, favouring funds that perform well but also create a positive impact, as opposed to investing solely for performance.

EXCLUSIVE: Gulf Family Offices And European Distressed Assets - An Analysis

The Financial Times published an article about Gulf sovereign wealth funds which are mobilising to buy assets whose valuations have been hard hit by the coronavirus pandemic. Sadly, distressed assets will no doubt soon be flooding the market looking for rescue investors. Yet there may be problems for bankers and asset managers taking potential deals to the sovereign wealth funds. The oil price is at a 20-year low as coronavirus depresses demand, and Gulf countries may need to support their domestic economies. Secondly, sovereign wealth funds have high visibility and there is strong competition for their attention. Much less is known about family offices. The Single Family Offices Database from Highworth is an online resource which provides detailed profiles of over 900 single family offices globally, including a number of sovereign family offices in Gulf countries.

Assets under management in GCC to grow steadily from $260bn in 2018, Moody's says

The asset management industry in the Arabian Gulf is set to grow, as regional governments overhaul their hydrocarbon-dependent economies and ease regulations. According to Moody’s Investors Service, investment managers in the six-member economic bloc of the GCC had $260 billion (Dh954bn) of assets under management at the end of last year. The Gulf states are trying to overhaul their economies and cut their dependence on oil. Saudi Arabia and the UAE are pursuing their own economic reforms to develop alternative lines of revenue. Both countries have introduced laws to broaden their appeal to foreign investors. Moody’s expects global market leaders to expand their presence in the Saudi Arabia due to a relaxation of foreign ownership limits coupled with more transparent regulations.

#Nigeria Should Develop Policies To Enhance Islamic Estate Planning – Awojobi

In this interview FBNQuest Trustees managing director Kunle Awojobi speaks about the benefits of Islamic Estate Planning. Islamic Estate Planning is considered an act of purifying or cleansing the individual, which involves voluntary and compulsory distributions made after death. Islamic Estate Planning is a relatively new area in Islamic Finance in Nigeria. In 2017, FBNQuest Trustees began educating Muslims through its flagship programme the Legacy Series, both on radio and in press. They also established partnerships with key players in the Islamic Finance space. FBNQuest Trustees helps with the management of Islamic Wills, but also other instruments like Zakat, Wakaf, Hibah, etc.

Experts Urge Nigerians to Embrace Islamic Estate Planning

At the Islamic Estate Clinic held on April 28, 2019 in Abuja, different speakers highlighted how Nigerians, both Muslims and non-Muslims can benefit from the Islamic Estate Planning system. The event was put together by FBNQuest Trustees, with Managing Director, Adekunle Awojobi, hosting it. The clinic featured sessions facilitated by Dr. Bashir Umar, a renowned Islamic Financial Scholar. The sessions covered Waqaf, Wasiyyah, Zakat, Hibah and Takaful, among other asset preservation and wealth transfer principles. FBNQuest Trustees said it remains committed to pioneering critical conversations such as this and helping Nigerians make sense of assets accrued in the course of their lives, without compromising their faith or values.

#UAE private wealth forecast to grow to $590bn by 2022

According to the Boston Consulting Group (BCG), private wealth in the UAE saw positive growth between 2016 and 2017 of 8% and this growth is projected to remain steady over the next five years. Private wealth is expected to reach $590 billion in investable assets by 2022. The main drivers were the bull market environment in all major economies and the significant strengthening of most major currencies against the dollar. While offshore share is expected to decline over the next five years from 30% in 2017 to 24.1% in 2022, it will continue to grow to reach $140 billion in the UAE in the same period. The report also showed that personal wealth in the Middle East rose by 11% to $3.8 trillion in 2017, a significant increase compared with the rate for the previous five years.

Noor Bank rolls out Noor Wealth

Noor Bank has launched Noor Wealth, a Shari’ah-compliant platform offering tailored product mixes. Noor Wealth targets customers with a minimum of AED 367,300 of assets under management or a minimum salary of AED 50,000. The bank offers mutual funds among other 10 lenders in the GCC and it also offers access to fixed-income products through its Sukuk platform and Islamic structured products. Noor Wealth collaborates with Knight Frank to offer global physical real estate services for its customers. Mufazzal Kajiji, Head of Retail Banking at Noor Bank, said that Noor Wealth currently serves clients from 10 countries and is in the process of expanding.

Islamic wealth management and its relevance in modern times

The objective of Islamic wealth management is economic justice through equitable distribution of wealth. This by no means restricts private ownership and entrepreneurship but a wider circulation of wealth and invested in socially beneficial economic activity. To serve social justice, wealth is not considered legitimately earned unless the risk-and-rewards are both shared in a financial contract: so one-sided no-risk-sharing contracts are not permitted. Islamic wealth management involves wealth generation, accumulation, preservation, purification and distribution. Creation of wealth is defined more broadly than in conventional practice. A set of filters are applied to financial transactions that ensure permissibility. Impermissible gains are expected to be distributed to the needy as a method of purification or cleansing. The process of cleansing applies in corporate finance and investment as well.

Asset management industry ‘set for growth’

#Bahrain’s assets management industry is set to see continued strong growth in the next five years. Central Bank of Bahrain supervisor Abdulrahman Al Baker said this positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets. Other factors include the enchanced regulation on asset management and capital markets, the growing wealth of high net worth individuals, as well as the steady economic growth in the region.

Wealth protection and succession solutions for wealth families

Dynastic planning is increasingly topical in the Middle East as founders focus more attention on ensuring that the family remains in harmony. According to Laurence Black, Regional Director at Asiaciti Trust, establishing a structure to manage family dynamics and ensure a smooth transition of assets helps minimise family conflict. As families become more global from their Middle East bases, there are more and more issues to consider. Families are looking further out in wealth transitioning as well, thinking about their personal legacies, such as philanthropic interests. Well-structured dynastic planning helps mitigate dangers that might arise due to political instability or other forms of fragmentation like foreign ownership rules. Cross-border issues are ever more prevalent as asset classes and geographical dispersion become more diverse. Trust structures and other special vehicles are ideal for protecting assets and can maintain control for the principals in their lifetimes.

Islamic legacy planning – evolution or revolution?

The typical GCC merchant family is facing many challenges to the maintenance, expansion and inter-generational transitioning of its wealth. According to Yann Mrazek, Managing Partner at M/HQ, there is some gradual increase in investment outside the region, but nearly three-quarters remains in the region. The focus remains concentrated on only three asset classes, the family’s own business, real estate, cash or deposits. While times are clearly changing and people from the GCC are spreading out further, their assets seem to become more concentrated. Moreover, the UAE economy is more open than ever before, implying greater competition for businesses. All this represents a wonderful opportunity for firms such as M/HQ. An estimated 30% of families are not thinking about estate planning, while 70% are receptive to legacy matters. For those with offshore assets, a trust or a foundation are likely to be compatible. For domestic assets, there are new tools being rolled out in the region. These include new SFO, trust and foundation regimes.

Managing wealth for a new generation

Tariq Bin Hendi, Ph.D., Executive Vice President of Emirates NBD, discussed the challenges that lie ahead for Private Banking. Bin Hendi said that approximately 200,000 ultra-high net-worth individuals are going to be passing down almost 30 trillion US dollars to their children. In addition, there will be millions of people passing down more moderate wealth, from the entrepreneurial and business fields. In the UAE, the older generation still prefer real estate and equities to the private equity and technology sectors that their children and grandchildren favor. Wealth management institutions are changing the way they interact with the new generation of clients. They need to better equip themselves with more nimble technology, from AI to Robo-advisors to ATMs, so as to not lose ground to the new startups. Bin Hendi suggests a new generation of products and services, which include a combination of human and AI interaction. Emirates NBD is spending 1 billion Dirhams over the next 3 years to bring about this technological revolution.

Wahed Invest: a Sharia-compliant #investment #robo-adviser

Robo-advisers are opening up investment advice to the masses. They can provide sound investment advice for a fraction of the cost of their human counterparts, making it affordable enough for those with as little as US$100 to invest. Junaid Wahedna has taken the robo-investment concept a step further, making it available for those looking for Sharia-compliant investment options. Wahed Invest charges far lower fees than those charged by a conventional wealth manager. The robo-advisor Betterment has accrued over $10 billion worth of assets under management in the US since its launch in 2008. Currently, all of Wahed’s clients are from the US and Mr Wahedna says it plans to start accepting international customers. The company has 50 full-time employees and it has offices in New York, London, Dubai and Mumbai. The company sees a lot of potential in India, having seen strong demand for Islamic investing in the country from its pre-registered clients.

Islamic #funds, asset management sector poised for growth

A report by Malaysia International Islamic Financial Center shows that the Islamic fund and wealth management sector is expected to grow significantly. The report notes that Malaysia and Saudi Arabia have the largest market share of the global Islamic funds and wealth management industry, together holding more than 67%. Saudi Arabia contributed a 35.6%-share of $25.2bn and 209 Islamic funds at end of the first quarter of 2017, while Malaysia has the most number of Islamic funds globally with 388 funds managing a total AuM of $22.6bn. The growth of the sector stems from the fact that global fund and asset managers increasingly notice the potential of this sector. Since it is now also accessible to institutional investors, as well as non-Muslim investors, they began using it as a new way to diversify investments. In a projection by Thomson Reuters, the global Islamic funds and asset management industry remains poised for growth and should increase in volume by more than 8% to $77bn by 2019.

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